Shanghai Tang: China's First Great Luxury Brand

Case Analysis

Shanghai Tang: China's First Great Luxury Brand

1. VIEWPOINT

Shanghai Tang is a luxury brand that focuses on Chinese-inspired fashion, accessories and home decoration products. A Chinese label that set out to rejuvenate Chinese fashion of the 1920's and 1930's. It was created by David Tang and it went from what may be the best for a Chinese brand could be in the eyes of Americans who loves the Chinese culture, to a nearby-bankrupted company in 1998 before being acquired by Raphael le Masne de Chermont or known as Richemont. In the first few years of the brand, Tang's catchy, cross-cultural style and ties to celebrities, powered up the buzz surrounding the brand. But the brand was unable to establish its core customer outside its home market of Hong Kong, and the company struggled to find a niche among successfully, established global luxury.

Richemont transformed the company from a quirky retailer based on tailoring to a full-fledged Chinese Lifestyle brand while her creative director, Joanne Ooi, who served for 7 years in the company, focus on the clothes that were based on traditional Chinese designs and themes with sales for Shanghai Tang increasing 50%. Ooi was also one of the first persons to use Chinese models in international advertising campaigns.

2. TIME CONTEXT

I. PROBLEM STATEMENT

1. The overpricing of Shanghai Tang's luxury products.
2. Confusing the customer on the brand image of Shanghai Tang.
3. Shanghai Tang's fashion that lacks modernity.

II. STATEMENT OF THE OBJECTIVES

1. To compete with high-end fashion business.
2. To have modern or fresh collections for the customers to come back.
3. To be the first big luxury brand out of Asia.

III. AREAS OF CONSIDERATION (SWOT)

STRENGTH:

• High quality.
• Unique brand image and theme.
• Traditional craftsmanship.

WEAKNESSES:

• Overpricing.
• Eccentric products.
• Most customers patronized it as a once in a lifetime shopping destination.

OPPORTUNITIES:

• First big luxury brand out of Asia.
• Trendsetter
• Rising power of Chinese luxury market..

THREAT:

• The easily changes of people's taste in fashion.
• Imitations or products that are same with them but with cheaper price.
• High competitions from domestic and international brands
• Some consumers prefer established western luxury brands

IV. ASSUMPTIONS

Limits on Chinese manufacturers designers' creativity. Factories were able to produce good quality products but could not add all the crafty refinements that high-end fashion require.

V. ALTERNATIVE COURSES OF ACTION

• Systematically price increase.
• Creating relationship with customers.
• Make the Brand image luxurious.

VI. ANALYSIS

One of the problems encountered by Shanghai Tang is there over pricing. Pricing is a process. It can't be priced too expensively in its first produce. It has no doubt that Shanghai Tang has a high quality and unique image and theme, it is very hard and challenging to position a Chinese born and made brand as luxury, due to Chinese not having a lot of knowledge how to create perception of luxuriousness. It must take in consideration the impact of Shanghai Tang’s luxury products  to the customers to avoid having of a once in a lifetime customers. Since, customers are the most important person in selling products. They are the ones that is needed to fulfill their wants and needs.